Beauty Ecommerce

Delivered February 21st, 2020. Contributors: Michelle A.

Beauty Ecommerce

Three trends in the beauty ecommerce space are communities, personalization, and augmented reality. There are several brands that are successfully innovating in the space, utilizing these and other trends, and include Harley, Neutrogena, and Lancome.

Trends

Determining Trends

To determine the ecommerce trends to include, we looked for trend reports on beauty sites, from experts in the field, on reputable media sites, and from the results of customer surveys. This led us to reports from Forbes, Shopify, CB Insights, Yotpo, and Ecommerce News, among others.

Trends that showed up in multiple reports, and also had facts and data to support their inclusion, are the ones that were chosen for this report.

Communities

Communities can be created on a variety of platforms and can provide support to potential customers during their purchase journey. Examples of places to create and nurture communities include on social media, in online forums, and on a website.

One reason that building communities is essential is because 44.7% of women said that customer reviews were the most influential factor when making a purchase, followed by referrals from friends at 44.5%. Established brand communities have the ability to provide a space where consumers can find both of these influencing factors.

Beauty influencers are people who have already established communities on their social media platforms, and tapping into these communities can be a faster way, especially for newer brands, to tap into the community dynamic.

Brands that utilize user generated content (UGC) on their social media sites have found another way to build community. Sixty four percent of social media users look for UGC before making a purchase, so putting that content on the brand's social media platforms will draw customers there.

TokyWoky is a French startup that uses collaborative chat to allow customers to interact with each other, rather than a sales rep, while they are shopping. The company found that consumers that interact with other customers are four times more likely to make a purchase.

Sephora has a large online community, Beauty Talk, that allows customers to ask questions, post pictures of themselves using Sephora products, and get suggestions from a huge community of beauty enthusiasts. Other than setting up the space and having to moderate, Sephora does not have to do much in the community.

Personalization

In beauty, as in most areas, consumers are looking for personalization. Getting help selecting products has always been part of the appeal of shopping in store, where brands provide beauty experts to guide selections. However, technology now allows those same interactions to occur online.

Survey data shows that 80% of consumers are more likely to make a purchase from companies that offer personalization in either the product or the experience.

A key tool for personalization in ecommerce is the internet survey. Since people in general enjoy talking about themselves, asking them to complete a survey about their hair or skin is not usually a difficult sell. One brand that uses this strategy, Prose, gets over one million survey submissions each month.

There are many benefits to personalizing the beauty experience for consumers. These can include establishing a brand as an expert, increased customer retention, increased conversion rates, and larger average basket size.

Although not specific to beauty, data overwhelmingly shows the financial benefits of personalization. Of companies that had an advanced personalization strategy, 93% increased revenue. Seventy seven percent of these companies exceeded revenue goals, while 74% have a budget dedicated to personalization.

Prose is a hair company that is leaning into the personalization trend. The company offers over 50 billion product formulations. Since the company launched in 2017, they have increased their customer base five-fold.

Augmented Reality

Augmented reality (AR) has been a game changer in the beauty industry as it allows customers to try on products, an experience that previously required a visit to a physical store location. Although the experience is digital, it can provide the same benefit for the customer, knowing what the product will look like on them before they make a purchase.

One sign that this trend is growing and being embraced by the industry is the fact that large players in the industry are embracing it. L'Oreal is nurturing startups in the space, and has even acquired Modiface, an AR beauty company. LVMH has organized an accelerator program which is designed to promote and foster innovation in the beauty industry.

Proof of the success of the strategy can be seen in the fact that conversion rates tripled for L'Oreal when they started using the Modiface AR tools.

Sephora Digital Artist is one of the top examples of AR in the beauty space. The tool is powered by Modiface and has been available since 2016.

Case Studies

Harley

Harley is an online retailer that provides personalized skincare recommendations and prescriptions from medical practitioners.

Consumers are able to schedule an online consultation with vetted skincare practitioners, with the entire process happening digitally through video chats.

Once they receive their personalized recommendation, customers can choose to buy the products immediately on the Harley platform and receive them within 24 hours, or can take the recommendations to a clinic and make the purchase there.

The platform also offers a concierge service which provides details on proper application, the ability to replenish products, and access to the practitioner.

The Harley strategy offers benefits for both consumers and practitioners, as doctors can access new patients, and customers can reach doctors that may otherwise not be available to them.

Since Harley does not create their own products, they make money by receiving a 20% commission on all product sales.

The company only launched in early 2019 so data on revenue and growth is scarce. However, it was reported in September 2019 that the company was looking to expand from the UK, to other European countries and the U.S.

Neutrogena Skin360

Neutrogena Skin360 was originally launched in 2018 and was designed to turn iPhones into skin scanning devices that would provide the level of analysis usually found in a dermatologist's office. At launch, in order for the app to work, consumers needed to purchase a $50 SkinScanner tool.

Although no data was found that indicated how successful the app was, In early 2020 Neutrogena introduced an updated version of the app which uses the phone camera, and the SkinScanner is no longer required. This move may indicate that the additional cost of the tool may have been a deterrent to use for consumers.

The app works by comparing selfies provided by customers to a database of 10,000 other selfies. This analysis results in scores for dark spots, fine lines, wrinkles, dark circles, and smoothness, as well as an overall score. The scores are on a scale of 1-10.

The tool provides product recommendations to consumers based on the results of their scan. Therefore, it is likely one of the main purposes of the app was to increase customer engagement and increase sales.

Lancome Live Community Chat

Lancome partnered with TokyWoky to launch live community chat on its website. The impetus behind the change was the fact that Lancome felt that new products were not receiving reviews on new products fast enough to generate success.

The peer-to-peer chat resulted in over 500 ambassadors on the website. These were active members who would answer questions from online shoppers while they were shopping.

Although the peer-to-peer chat feature was not seen when examining the Lancome website, that may be because registration and login is required to participate.

According to TokyWoky, they have over 100 brands and retailers using their chat technology. This relatively low number shows this is still a new and innovative technology with plenty of room to grow.

Once TokyWoky was launched on the Lancome website, new products receive 25 quality reviews within a week. Additionally, conversion rates increased by 12%.

Lancome also took the innovation a step further by giving the top 25 ambassadors early access to new products, which gave them the opportunity to get feedback and reviews before new products went live on the website.

Website Best Practices for Ecommerce

Determining Best Practices

To determine ecommerce best practices for beauty and hair websites, we examined reports and survey results from industry experts in both beauty and website design, market analysis companies, and consultancies. This led us to sources including Econsultancy, Website Builder Expert, and Shopify, among others.

Practices that were touted by multiple sources, and those that had data backing up their inclusion, were the ones chosen for this report.

However, research found that there were very few website design recommendations that were focused solely on hair and beauty websites. We did find one, purchasing conditions, which has been provided below. The other best practice is applicable to businesses in general, but the examples are from beauty sites.

Purchasing Conditions

A survey of European women found that when shopping for beauty products online, purchasing conditions had a bigger impact on creating a positive customer experiences than website features.

UGC and ratings were the number one feature that consumers found important to having a good experience when purchasing beauty products online, with an average of 16% choosing this feature. The next three most important features selected were quick view (5.8%), one click purchases (5.7%), and filters (5.5%).

Sixty eight percent of users search social media for UGC before making a purchase, Websites that can make it easier for consumers to find this content could benefit.

Customer reviews were important to about 87% of women surveyed, which indicates that review inclusion is no longer optional. UGC and customer reviews are the online version of word of mouth advertising.

Tarte Cosmetics takes customer reviews to the next level by allowing customers to include images in their reviews. By having user provided images in the reviews, this increases trust in the reviews by providing social proof that real people are using the products. Customers also like the opportunity to see how products look on real women, as opposed to models.

Tarte's use of the visual reviews has resulted in shoppers that are twice as likely to convert, and order totals that are 6% larger.

Visual Elements

Strong visual elements are important for a website as consumers tend to make a decision about websites within 0.05 seconds of seeing the site.

While pictures are obviously important, research shows that videos can improve conversions by 86%. Images should be unique, not stock photos, if possible, and visuals should also include infographics if relevant.

Pictures should be descriptive which allows for less text. By showing your customers what they will get, instead of telling them, it is easier for them to engage with the content. Images, especially faces, can cause an emotional response which can help consumers form a connection with a brand.

As important as choosing which images to use, is ensuring that the images are sized and formatted properly. This can help improve the user experience by loading pages more quickly.